Did you file your 2011 taxes?? I hope so. I actually put in for an extension for my own because I want to make sure that I have every deduction that I can get claimed, and I want to make sure that everything else is done perfect before I submit. When you are an entrepreneur, a lot more goes into doing your taxes than the average 9-5 worker. The below post gives us some valuable information.
2012 tax season is now firmly in the rearview mirror, but for small business owners or freelancers, it’s never too early to begin planning for next year. If you have multiple income streams and manage your own tax preparation, you’ve got a ton of paperwork to contend with. That makes early planning all the more important. But even with all of that forethought, it can still be all too easy to miss some key deductions. You spend a great deal of money on all of those computers and tech gadgets that make your business work, but are you taking those purchases into consideration when looking to lower your tax bill? Here are just a few commonly overlooked tax deductions to help mitigate the cost of your computer and other tech gadgets.
Your primary business computer should certainly be noted as an expense on your yearly tax filing. But there are a couple of different ways to approach how you deduct it. First off, always look to buy a computer towards the end of the calendar year. That allows you to claim it as part of that year’s tax preparation, helping to insure a better return. But did you know you can claim it in two different ways? The freelancer or business owner who uses a computer for business can either claim the entire purchase price in the year they buy the device, or they can claim yearly depreciation and spread it out over several years. Ask a tax professional which method will lead to a better result, but claiming the entire expense at once will certainly impact that year’s refund greatly.
What about the other devices that you use for business? Most people are familiar with claiming smartphones that they use for work, although it can be complicated by the fact that most people use their smartphones for personal reasons as well as business. But what about the tablet device you recently purchased? If you can prove that your tablet is integral to the management of your business, you can claim it completely as a business expense. One example would be if you use the tablet to process credit card purchases in a retail business. Some restaurants run their shifts entirely with tablets, and each one can be claimed as a business expense.
The best way to insure that you can claim all of your tech gadgets is to create a document that outlines your business’ policy with technology purchases. This will be of key importance if you are a very small business or a single practitioner, and aren’t working in computer consulting or some other obvious technology industry.
Regardless of the size of your business, don’t forget about all of your software costs. Even expensive software isn’t often listed as a depreciating expense, but you should certainly claim it in your next year’s taxes. In those cases, you can claim it as an office expense, which, on top of all of your other gadgets, starts to significantly lower your taxable income. Basically, any gadget with a purchase price of under $100, such as the cell phone screen protector you just bought, should be listed in this same manner.